Edinburgh Council to clear £128m Newhaven tram line contracts before final OK

Councillors will be asked to back tram extension contracts being awarded to two companies totalling £128m – ahead of the crunch decision meeting on March 14.

The council’s business case for extending the tram line to Newhaven totals £207.3m – and includes £31.9m of “risk” and another £11.3m of “optimism bias”.

A “swept path contractor” will clear any utilities in the way, believed to be around 1,200 conflicts, before the systems and infrastructure contractor will build the tram line. But costs could soar due to contractors being unsure what lies beneath the proposed route.

The city council’s finance and resources committee will be asked to approve the award of a £22m swept path contract to Morrison Utility Services Ltd and a £106m infrastructure and systems contact to Sacyr Farrans Neopul Joint Venture (SFNJV) when councillors meet on Thursday. The tram extension budget is now £207.3m and will be funded by borrowing and a £20m dividend from Lothian buses – paid back by future tram fares.

If the committee votes to award the contracts on Thursday, this is subject to a decision on the final business case by the full council on Thursday 14 March, which has been recommended for approval.

Finance and resources convener, Cllr Alasdair Rankin, said: “The trams to Newhaven project team has completed a comprehensive and rigorous procurement exercise to select preferred contractors for both elements of the project.

“This process has been exhaustive, taking on board substantial lessons learned from the previous projects and following best industry practice. The finance and resources committee will carefully assess and scrutinise the outcome of this procurement process before arriving at a decision. Awarding the contracts will be subject to a final vote on the project by council on March 14.”

During the tender phase of the infrastructure and systems contract, two of the four interested companies pulled out due to “difficulties with getting their internal governance approval for the responsibilities and liabilities” while the swept path contract also received two bidders.

In a report to councillors, officers admit that “the actual costs will vary” in the £22m swept path contract, “depending on the extent of works required to clear the tram route of all below ground utilities and other obstructions”. In a separate report on the £160m infrastructure and systems project, there is also a warning that “the target cost may vary, depending on the level of agreed compensation events”. Conservatives have raised concerns that the project will not be completed within budget.

Tory Cllr Andrew Johnson said: “It’s a further risk to the taxpayer that the bill could go up and up. In the business case there are a number of unknowns. I don’t regard that as a cautious approach – who knows what they will find.

“I’m just struck by the huge costs that are involved here. Why are we doing this now when we have a crisis in health and social care? It really brings it home how much the administrations wants to push ahead with it.”

On Thursday, the transport and environment committee agreed to refer the £207.3m final business case to the full council, recommended for approval.

Transport convener, Cllr Lesley Macinnes, said: “This project is one of the most important things that we can do for this great city so that current and future generations can share in Edinburgh’s success.”